Producer Company (F)

1. The members of the producer company initially will receive the value for the produce pooled and supplied as determined by the directors. This amount will be given out later in the form of cash/ kind/ equity shares.
2. The members of the producer company will be entitled to get bonus shares in the same proportion to the shares held by them.
3. The surplus may be given as patronage bonus* to the members of the producer company.

Difficulty of Formation: Promotion of a company is not an easy task. A number of stages are involved in company promotion.

Separation of Ownership and Management: The ownership and management of public company is in different hands.

Factory System: The company form of entity leads to large-scale production.

Speculation in Shares: The joint stock companies facilitate speculation in the shares at stock exchanges.

Any of the following combination of producers can incorporate a producer company:

• Ten or more producers (individuals); or
• Two or more producer institutions; or
• Combination of the above two (10+2).

On registration under Section 581 C (1), the Producer Company shall become a body corporate as if it is a private limited company to which the provisions contained in this Part apply.

It cannot become or deemed to become a public limited company.

• Share capital of a Producer Company shall consist of equity shares only.
• Members’ equity cannot be publicly traded but only transferred
• Voting
• Only of individuals, then voting rights shall be based on a single vote for every member.
• Only of producer institutions, then voting rights on the basis of their participation.
• Combination of both individuals and producer institutions then voting rights shall be based on a single vote for every member.